The 2017 Trump tax cuts for rich were supported by Republican Congressmen. Democrats are now shaming Democrats over a provision in a bill which, in most aspects, will increase taxes on the wealthy.
A group of Democrats representing high-tax states led by Reps. Josh Gottheimer of New Jersey and Tom Suozzi of New YorkHouse Speaker Nancy Pelosi supported by Chuck Schumer, Senate Majority Leader, the push was made to insert a provision into the House version of Build Back Better that would roll back a $10,000 cap on the state and local tax (SALT) deduction — effectively a tax break that overwhelmingly favors the wealthy. But it is not the only thing. analysis The nonpartisan Joint Committee on Taxation concluded this week that the overall package would raise taxes on millionaires by more then 3 percentage points. Senate Democrats also want to be included in the overall package. “fix” the House-passed billTo reduce the wealth of the wealthy, the cap is raised to $80,000
Republicans who supported Trump’s tax cut, which increased federal deficit by $2 Trillion, were called “Republicans for Trump.” showering tax breaks on the top 1% of earners, are already running ads ahead of the 2022 midterms attacking Democrats for cutting taxes on the rich — in a bill that has not even passed the Senate.
Rep. Jason Smith, R-Mo., the top Republican on the House Budget Committee — who backed the Trump tax cuts — rolled out a new ad this week calling SALT the “Democrats’ way of giving the rich a tax cut.” This blatantly hypocritical attack line has been echoed in other circles of the GOP.
The Republican National Committee, which backed Trump’s tax cut, blasted out last week statement calling out the Democrats for trying to “give tax cuts to the wealthy.” National Republican Senatorial Committee Chairman Rick Scott, R-Fla., an ardent supporter of the 2017 tax gift to the wealthy, vowed to make sure that all states know about how much money Democrats “are going to give to rich people.” Republican-aligned groups such as Heritage Foundation are also included. running ads attacking Pelosi for slipping a “big tax break for her wealthy friends” into the bill.
These attacks are a dizzying turnaround by the party that, four years ago, voted to give the top 1 percent of earners an average tax reduction of $278,000 according to a recent analysis. The 2017 Republican tax law included a SALT cap. Democrats representing high-income, hightax states claimed that this was a violation of the Constitution. “punitive” measureThis was done to hurt blue states. Democrats Gottheimer, Suozzi and others pushed to eliminate the cap but ultimately came to an agreement on a proposal that would raise the cap to $80,000 annually.
But these Republican attacks also underscore the Democrats’ messaging problem ahead of a challenging 2022 midterm campaign. Economists from both sides of the aisle agree that the party’s SALT proposal is a regressive tax cut that would disproportionately benefit the top 5% of earners. The House proposal appears to have little chance of passing the Senate in its current form, where even Democrats from Gottheimer’s home state of New Jersey have lambasted it as a windfall for “millionaires and billionaires.”
“This bill should invest in our families and our future — not provide giveaways for the wealthy few,” Sen. Michael Bennet, D-Colo., said earlier this month. “The House’s SALT proposal cuts taxes for millionaires and billionaires on the backs of low-income and middle-income families. We should fix this in the Senate.”
“I think it gives tax breaks to the wrong people: Rich people,” complained Sen. Jon Tester, D-Mont.
Senator Bernie Sanders, I-Vt. has teamed up to Sen. Bob Menendez (D-N.J.), whose state would be disproportionately benefited from a rollback of the SALT cap, in order to reduce the benefits for millionaires.
Menendez said their proposal would “allow the full deductibility to middle-class working families, but it won’t go to those making over a million dollars. And therefore, the issue of millionaires and billionaires getting this tax deduction is not an issue.”
The proposal would completely eliminate the SALT limit for those earning less $400,000 to $550,000 per annum. This would likely still be a regressive cut in tax, but it would keep the $10,000 cap in effect for those who earn more.
“In terms of SALT, we must protect the middle class from high local and state taxes,” Sanders tweeted last week. “But we cannot provide 39% of the benefits to the top 1% — as is in the House bill. At a time of massive income inequality, we must increase taxes on the 1%, not give them huge tax breaks.”
The Sanders-Menendez plan “costs less than a third as much as repealing the cap fully and is much less regressive,” said Steve WamhoffDirector of federal tax policy at progressive-leaning Institute for Taxation and Economic Policy.
Initial plans by Democrats were to pay large portions of the Build back Better package with tax cuts for corporations and wealthy that were repealed by Trump. Sen. Kyrsten Sinema, D-Ariz., killed that planThe current version includes a 15% corporate minimum income tax for large corporations and a surtax for those who earn more than $10 million. An analysis by the JCT The bill would result in an increase in the average tax rate for millionaires of 4.1 percentage points in 2023, and 3.3 percentage point in 2025. Progressives warn that including the SALT rollback favoring wealthy individuals could prove fatal to a party that is facing its most difficult midterm elections in a decade.
“I’m not worried about the perception that we’re doing too much for wealthy people. I’m worried that we may do too much for wealthy people. It’s the reality that troubles me,” Sen. Elizabeth Warren, D-Mass., told Politico Last week. “I’m not here to help those at the top.”
Ron Wyden (D-Ore.), Senate Finance Chairman, expressed concern that Republicans would “pound” The message that Democrats were too soft upon millionaires in coming months was the message.
“You can’t be a political party that talks about demanding the wealthy pay their fair share of taxes, and then end up with a bill that gives large tax breaks to millionaires,” Sanders warned last week. “You can’t do that. The hypocrisy is too strong. It’s bad policy, it’s bad politics.”